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Fracking: So where’s the economic boom that was promised?

View SlideshowRequest to buy this photoEric Albrecht | DispatchRich Moore moved from Detroit to eastern Ohio to work at the MarkWest gas-processing plant. He and other transient workers live in a trailer park near Cadiz in Harrison County.

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CADIZ, Ohio — Rich Moore had never heard of fracking or Utica shale until his union posted a job
opening in September.

But they are the reasons the formerly out-of-work Detroit pipefitter now lives in a trailer in a
cold, muddy Harrison County campground.

Moore is one of thousands of transient workers who live in campers, motels and apartments in
shale country.

They’re here to drill and frack the Utica shale, as well as build the pipelines and processing
plants that connect natural gas to businesses and houses. The demand for skilled labor has brought
people from as far away as Texas and Florida to Harrison, Carroll and other eastern Ohio
counties.

The influx has helped boost the local economies in small towns that dot the region, and it is
straining the housing supply.

But out-of-state workers weren’t among the economic benefits touted by politicians and industry
leaders who predicted that shale drilling would create a much-needed infusion of jobs and cash in
Appalachian Ohio.

More than three years after the first Utica drilling permit was approved, transient workers are
among the most-tangible signs of the shale “boom.”

While economic activity has boosted sales-tax revenue significantly, which helps the economy,
there has been little measurable change in the underlying labor market.

When he’s not connecting the industrial pipes at the heart of the MarkWest natural-gas
processing plant, Moore lives down the road in Cadiz’s Sally Buffalo Park. Nearly every spot in
this 84-campsite section of the campground is occupied by a trailer ranging in condition from
shiny, white and new to dingy and decades old.

The camp, run by the village of Cadiz, offers basic electricity and water service for trailers
and little else. There are no Internet, cable TV or sewage hookups here. Toilet water has to be
ferried to a dump station.

Some in the area call such temporary trailer communities “man camps.”

“Living in a camp is not too bad,” Moore said, outside to adjust a tarp that helps keep the cold
out of his RV. “There’s money to be made here, and you don’t want to leave money on the table.”

According to the Cleveland Building and Construction Trades Council, a journeyman pipefitter can
make $32 an hour after union dues and fees. Moore and other camp dwellers say they often work
10-hour shifts, six days a week.

If he works even six months, Moore could make about $50,000.

A debate over job creation and the economic benefits of eastern Ohio’s Utica shale boom has
continued unresolved since drilling and fracking began in late 2010.

Oil and gas industry officials predicted in September 2011 that the growing effort to tap oil
and gas in the Utica shale would lead to more than 200,000 new jobs in four years.

So far, that has not panned out, even in the counties with the most drilling activity.

For example, Carroll County’s job market is still below pre-recession levels based on two key
measures. In November, the county had 12,800 employed residents and an unemployment rate of 7.6
percent, according to the Bureau of Labor Statistics. In November 2007, the county had 13,100
employed residents and an unemployment rate of 5.7 percent.

Carroll County is the center of shale drilling in eastern Ohio. Its employment statistics are
similar to those in other counties where shale drilling is underway. The figures are based on where
people live, so short-term workers from outside are not included.

The number of transient workers in Ohio is difficult to calculate.

Mark Partridge, an Ohio State University economist, and Shawn Bennett, spokesman for the
industry-advocacy group Energy In Depth, point to Pennsylvania studies that estimate that 30
percent of workers in that state’s shale industry are from other states.

Partridge and Bennett said it’s reasonable to assume that the same ratio of out-of-state workers
is working in Ohio’s Utica shale drilling and processing industry.

“We’re talking about the same industry,” Partridge said.

“I think it’s a very similar comparison,” Bennett said. “You are talking about an area where the
work force hasn’t been developed.”

Amy Rutledge, director of the Carroll County Chamber of Commerce, estimates there are at least
1,000 transient workers in her county. “That’s probably a low number,” she said.

The recent employment figures are a huge improvement from the depths of the economic downturn,
when the county’s jobless rate peaked at 16 percent, but the data do not indicate a red-hot labor
market.

Tom Stewart, vice president of the Ohio Oil and Gas Association, said employment figures don’t
necessarily reflect the economic changes.

“Too much of the focus, particularly within the media, has been on the drilling rig,” Stewart
said. “Finding people to man these rigs that are specifically constructed to accept the tools
necessary to do horizontal drilling is a very difficult process.

“We need to look downstream from the drilling rig and realize all the auxiliary economic
activity that swirls around this thing.”

“I think the real indicator is sales-tax receipts that have grown in the eastern counties where
this activity is taking place,” he said.

Sales-tax receipts in Carroll County totaled $2.6 million in 2012, the most-recent year figures
are available. That’s a 46 percent increase over the taxes collected in 2007.

Harrison County collected nearly $2 million in sales tax in 2012, a 47 percent increase.

Those figures only include the counties’ portion of sales tax. Both counties outpaced the state,
which saw an 11 percent increase, based on data from the Ohio Department of Taxation.

Of the dozen counties that had the largest percentage increase in sales-tax receipts, Carroll
and Harrison are the only two that did not raise rates during that time.

Business is so brisk at Carrollton’s Ace Hardware that co-owner Kim Mills uses two shipping
containers behind her store to hold merchandise.

The store supplies the odds and ends that oil and gas companies and workers need — power tools,
yards of hose and flexible tubing, hard hats, clear plastic face shields and lots of work
boots.

The pace of business never seems to slow. It’s 2 p.m., and a steady stream of customers, many in
work overalls, flows in and out the door.

“Five-gallon buckets are really big,” Mills said. “We’re selling a lot of heated garden hoses.
The workers need them so the water to their trailers won’t freeze.”

She said sales have increased substantially over the past two years, leading to an
expansion.

Economists say they are concerned that this kind of income could end up being akin to empty
calories — a brief jolt to the local economy with little change in a region’s long-term
fortunes.

“The deep-down question people need to ask is, ‘With this activity that’s going on in the
community, to what extent is it benefiting the community?’ ” said Tim Kelsey, an agricultural
economist at Penn State University who has studied the effects of shale development on his
state.

“If it is non-local companies bringing in non-local supplies and non-local workers, then there
isn’t much of an effect on the area.”

The development of Utica shale in Ohio — tracked in numbers of wells drilled — appears similar
to Pennsylvania, which experienced a drilling boom in its Marcellus shale.

From 2005 through 2008, oil and gas companies drilled 495 shale wells in Pennsylvania. More than
800 wells were drilled in 2009, and nearly 1,600 wells were completed in 2010, according to the
Pennsylvania Department of Environmental Protection.

Some experts say Pennsylvania’s boom might have peaked in 2011, when 1,963 wells were drilled.
The next year, there were 1,347 wells drilled.

Ohio’s experience with shale energy is similar. Ohio Department of Natural Resources records
show that 667 wells were drilled through 2013.

“Based on (Pennsylvania’s) experience, we’re talking five years to reach a peak, and then you
start falling off,” said OSU’s Partridge.

So far, Utica shale has more oil and natural-gas liquids than does Marcellus, which is largely
made up of natural gas. That’s an advantage for Ohio, experts say.

Natural-gas prices have remained low for several years, partly because of an abundant supply
from shale formations, while oil and natural-gas liquids are more valuable.

The liquids — ethane, propane and butane — are used as fuel or in making plastics.

Housing remains a hot commodity near the shale formations in eastern Ohio. Available apartments
in Carrollton are scarce, and rental rates have more than doubled there, said Rutledge, of the
chamber of commerce.

“The (oil and gas) business is definitely a transient business. That’s the nature of it,” she
said. “They get paid more than the average people around here, so that’s why landlords have raised
their rates.”

Bob McMahon said the $5,000 he spent to buy his trailer was a better deal than paying $450 a
week for a hotel room.

The Detroit pipefitter is a friend and neighbor of Rich Moore at Sally Buffalo Park. Like Moore,
he is helping construct the maze of industrial pipes and valves that make up the nearby Cadiz
processing plant.

“When this is done, I’ll take it home or sell it,” McMahon said of the trailer.

This past summer, most of an 84-campsite section of Sally Buffalo Park was occupied by oil and
gas and construction-trade workers, according to Scott Porter, park manager for the village of
Cadiz. That same section of the park was nearly full in late November, and Porter had just finished
helping a new transient worker park his RV in one of the last open spots.

Two new hotels are planned in Carrollton, Rutledge said.

Not all transient workers are from out of state. Jerry Puchajda, a general laborer from Lisbon,
in northeastern Ohio, is staying at Sally Buffalo Park in a small, beige 1968 Econoline Coachman
that’s pocked with minor dents and scrapes.

“It sleeps six comfortably,” he said sarcastically.

He is a member of Laborers Local 809 in Steubenville and assists scaffold builders and
pipefitters as well as cleans debris from working areas at the Cadiz gas-processing plant.

According to the construction trades council, that kind of work nets about $27 an hour.

“I came down here to make money,” Puchajda said. “That’s what everyone here is trying to
do."